Notice & Comment

The Limitations of Law and Leviathan, by Kristin E. Hickman

*This is the tenth post in a series on Cass Sunstein and Adrian Vermeule’s new book Law and Leviathan: Redeeming the Administrative State. For other posts in this series, click here.

In Law and Leviathan: Redeeming the Administrative State, Cass Sunstein and Adrian Vermeule offer what must be described as a fairly rosy account of the administrative state.  Given the contentiousness of the times, Law and Leviathan is delightful for its optimism about our capacity to find common ground and its effort to identify where that common ground may be found.  Such a tone is refreshing for an era in which people across the political spectrum, albeit at different times and for different reasons, perceive the glass of administrative governance as at least half empty (if not moreso).  Moderation and hope are truly welcome at a time when otherwise sensible people seem eager to find evidence that the sky is falling in every agency pronouncement, incremental doctrinal shift, or snippet of excessive judicial rhetoric that is not to their liking.  (I do not exempt Supreme Court justices from this critique.) 

In Law and Leviathan, Sunstein and Vermeule aim to provide a structure “that can transcend the current debates and provide a unifying framework for accommodating a variety of first-order views, with an eye toward promoting the common good and helping to identify a path forward amid intense disagreements on fundamental issues.”  (p. 6)  They call upon courts especially to honor the legislative compromises of the Administrative Procedure Act (APA), citing particularly Wong Yang Sung v. McGrath and Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc.  (pp. 7−8).  Drawing from the work of Lon Fuller, they put forth several core principles as representing “the morality of administrative law” that they see reflected in administrative law doctrine and the APA, at least when read from a purposivist perspective.  These core principles include, for example, that agencies follow their own rules, that retroactive rulemaking be limited to prevent abuse, and that official agency declarations of law and policy track the rules that agencies actually apply.  (pp. 8, 40)  Put more simply, the morality of administrative law is rooted in the values of consistency, notice, and transparency.  And really, who would argue that administrative governance should not follow those principles?

Sunstein and Vermeule describe the Fullerian principles they advance in narrower terms than consistency, notice, and transparency.  Their language changes a little between the introduction and the relevant chapter (pp. 8, 40), but articulating the relevant principles using terms that narrow the principles’ scope makes it easier to avoid some of the harder issues of the day-to-day reality of administrative governance.  For example, is it really enough that rulemaking should not be retroactive?  Or, even more constrained, abusively retroactive?  What about rulemaking that is prospective but relies on procedures that deprive interested parties of effective notice and an opportunity to participate meaningfully in developing the rules in question?  Or, to take another principle, it seems obvious that official agency declarations of law and policy should track the rules that agencies actually apply.  But what makes a declaration “official?”  And depending upon how one defines that term, what about unofficial declarations?  The core principles that Sunstein and Vermeule advance provide more specificity to the admittedly-fuzzy ideals of consistency, notice, and transparency, which is useful.  But the terms in which those core principles are framed arguably leave on the table as potentially acceptable a number of contemporary administrative practices that many people find problematic.

Moreover, consistency, notice, and transparency reflect only part of the administrative law equation—both in the courts and on the ground.  As much as administrative law embraces and promotes consistency, notice, and transparency as ideals, it also places considerable value upon administrative flexibility and efficiency, and practically fetishizes technocratic expertise.  An appreciation for flexibility, efficiency, and expertise is what prompts Congress to delegate administrative power and responsibility to agencies in the first instance.  Consistency, notice, and transparency are values introduced by administrative law only after that initial act.  Regardless, administrative law really only makes sense as an effort to balance and reconcile tensions between these two competing sets of values.  Consistency, notice, and transparency are often sacrificed in the name of flexibility, efficiency, and the desire or need to rely on agency expertise.  On those occasions, parties who find themselves with the short end of the stick may not find the surrogate safeguards suggested by Sunstein and Vermeule (ch. 5) to be of much comfort.    

Sunstein and Vermeule do not purport to resolve all of administrative law’s difficult issues in Law and Leviathan.  Instead, they examine, justify, and endeavor to reconcile a number of longstanding administrative law doctrines and some recent Supreme Court cases using their Fullerian core principles.  Their analysis demonstrates the power of their chosen approach.  Nevertheless, to illustrate my point about the limitations of their structure, I offer one example from among several common administrative practices and administrative law doctrines that trouble practicing lawyers and regulated parties across the political spectrum:  interim-final rulemaking based on an invalid good cause claim.  As practiced, interim-final rulemaking preferences flexibility and efficiency (as well as assumptions regarding the good faith of agency experts), while consistency, notice, and transparency (as well as the legislative compromises of the Administrative Procedure Act) take the back seat.  Sunstein and Vermeule do not address interim-final rulemaking as a contemporary practice.  Yet, even when abused, interim-final rulemaking does not seem to be problematic under any of the core principles on which Sunstein and Vermeule base their morality of administrative law.  Maybe that result means interim-final rules really are just fine, even when predicated on an invalid good cause claim, and those who object to interim-final rules in such circumstances are immoderate outliers.  Or instead, maybe that result reflects the inadequacy of the structure that Sunstein and Vermeule advance to truly capture the middle ground that they seek.

In the ordinary course, APA § 553 anticipates that agencies seeking to adopt legally-binding regulations will follow procedures that begin with a notice of proposed rulemaking and request for comments from interested members of the public.  After notice and the opportunity for public participation, the agency issues final rules accompanied by an explanatory preamble that addresses the comments received, with the rules becoming effective no sooner than thirty days after their publication.  Although the text of the APA does not explicitly say so, the implication of the serial arrangement of the steps, one by one, in the text is obvious:  notice and an opportunity for public participation come temporally before legally-binding rules are adopted.  At least in theory, and for the most part in practice, these procedures are an exemplar of notice and transparency.  Agencies may at some point change their minds about the rules they adopt and decide to pursue a different approach.  When agencies do so, however, they must go through the same process all over again.  Thus, interested parties again would have notice that the rules they must follow may be about to change.  The procedural burden of notice-and-comment rulemaking is sufficiently hefty to discourage agencies from changing their minds too often, although such changes occur often enough.  In the meantime, as Sunstein and Vermeule recognize, the Accardi/Arizona Grocery principle requires agencies to follow their own rules.  (pp. 64−70)  Thus, in the end, notice-and-comment rulemaking promotes consistency as well—whether those concepts are framed narrowly or broadly. 

It has become common, however, for agencies to issue legally-binding rules labeled as “interim-final” or “temporary” without following these procedures, and thus without the consistency, notice, and transparency that those procedures offer.  APA § 553(b) exempts legally-binding regulations from pre-promulgation notice and comment requirements when the agency has good cause for avoiding them.  Usually, agencies issuing interim-final or temporary rules without pre-promulgation notice and comment claim good cause.  Often, agencies issuing interim-final or temporary rules will seek post-promulgation comments and address any comments received in a preamble accompanying subsequent “final” rules that may or may not be identical to the interim-final or temporary ones.  Where the good cause exception applies, these post-promulgation procedures are optional and reflect good governance and a respect for the merits of public participation.  That said, post-promulgation procedures generally are understood to be a weak substitute for pre-promulgation ones.  As a practical matter, the further an agency goes down the road of the rulemaking process, the more committed it is to the regulations it has drafted, and the less amenable it will be to making significant changes in response to comments received.  Consequently, as a practical matter, one concern is that parties who might otherwise be interested in commenting will see a request for post-promulgation comments as insincere and will not bother to submit comments. 

Where good cause exists, Congress has simply recognized that, occasionally, the need for flexibility and efficiency must take precedence over the ordinary preference for consistency, notice, and transparency via notice-and-comment rulemaking procedures.  In other words, unusual circumstances require rebalancing the two sets of competing values.  But what about where the courts later decide that the agency’s assertion of good cause is mistaken—i.e., the agency lacked good cause and should have used notice and comment in the first place?  A 2012 Government Accountability Office (GAO) study found that agencies did not publish a notice of proposed rulemaking and invite public comment before issuing 35% of major rules and 44% of non-major rules published from 2003 through 2010.  Most of those rules justified the lack of notice and comment by claiming good cause.  The sheer volume of such claims, however, strongly suggests a highly aggressive agency conception of what constitutes good cause. 

How should the courts perceive final regulations that originated as interim-final or temporary regulations predicated on an inadequate or invalid good cause claim?  The lower courts have struggled with this question.  By the time these matters are litigated, agencies generally are able to replace interim-final or temporary rules with final ones with preambles addressing comments received.  Courts sometimes have wondered what would be achieved by invalidating the final rules based on the procedural flaws of their interim-final or temporary predecessors.  Supporters of flexibility, efficiency, and reliance on agency expertise correspondingly wonder what all the fuss is about, since the agency got around to notice and comment eventually.  Yet, parties subject to those regulations and their lawyers appreciate the difference between participation before and participation after, and the latter leaves them feeling ignored, skeptical of the agency’s motives, and resentful of the rules in question. 

How does interim-final rulemaking with only post-promulgation notice and comment and without a valid good cause claim square with the structure that Sunstein and Vermeule envision as the morality of administrative law?  Certainly, interim-final rulemaking ignores the preference of APA § 553 that notice and opportunity for public participation generally should precede the issuance of legally-binding rules (the Supreme Court’s hypertextualist reading of the APA in Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania notwithstanding).  Nevertheless, as articulated by Sunstein and Vermeule, none of the Fullerian principles of administrative law morality are inconsistent with interim-final rulemaking, even where the agency lacks good cause.  Sunstein and Vermeule do include frequent changes in rules among their principles. (p. 40)  They also recognize that, under cases like FCC v. Fox Television Stations, Inc., and Encino Motorcars, LLC v. Navarro, an agency that changes its mind too often at the expense of reliance interests risks seeing its actions invalidated.  (pp. 75−76)  Thus, policy changes through interim-final rulemaking will be scrutinized.  Yet arbitrariness review of this sort does not prohibit changing positions outright; it merely requires that an agency explain itself to the reviewing court’s satisfaction, which the Supreme Court in Fox Television recognized is not a very high bar.  Beyond that, the structure advanced by Sunstein and Vermeule seems to have little to offer those who object to agency abuses of interim-final rulemaking.     

Other contemporary administrative practices may illustrate similarly the limitations of the structure that Sunstein and Vermeule advocate.  Agency abuse of subregulatory guidance, coupled with justiciability limitations on the reviewability thereof, comes most immediately to mind. 

Regardless, Law and Leviathan is a thoughtful and interesting read that does a nice job of finding a good swath of common ground, perhaps not for everyone, but for a fair range of people with a variety of perspectives.  It has its holes and limitations, but it is a short book that cannot and does not try to resolve all of the issues of administrative governance.  In these challenging times, identifying even a small patch of commonality is useful and welcome.  The path to a less division and greater consensus has to begin somewhere.  At the very least, Law and Leviathan provides a good place to start.   

Kristin E. Hickman is the McKnight Presidential Professor in Law at the University of Minnesota.